Nasdaq (NDX) - A Report Brought to You by Q8 Trade
A sneak peek of the Nasdaq index and its importance
The NASDAQ index is one of the most famous financial indicators in the world, and it is the most famous indicators for measuring the American stock market, in addition to being a financial tool that traders can trade like other global indicators.
The Nasdaq index is one of the three most important indicators in the United States of America with the Dow Jones and the Standard & Poor’s 500 index, as it reflects the reality of the global global economy, and the Nasdaq 100 index was established on January 31, 1985 by NASDAQ under the symbol NDX in the financial markets and is Its value is in US dollars, and its strength is measured by the technology companies ’stock indexes.
The index includes the largest 100 technology companies, whether inside or outside the United States, which operate in many sectors such as technology, electronics, telecommunications, and retail companies, as it is a financial indicator that measures the performance of 100 companies traded on the NASDAQ, and the NASDAQ index is distinguished from other American indicators that it now includes 5 companies Non-American foreigners in 2015, and the companies listed there are reviewed every year, not every three months, and this index was first dealt with on the New York Stock Exchange in 1985 .
Nasdaq index earnings history
In 1985, the index started trading from 250 pips.
In 1999, the Nasdaq reached its highest level in its history, when it approached 5,000 points.
But due to the advent of dotcom, which hit tech companies, the index scored 1.000 points.
In 2001, the Nasdaq hit record highs after experiencing a major rally of more than 284 percent in a year and five months, before dropping at the same speed.
In 2007, the index came back to score more than 2,700 points.
In 2008, the index fell to 1.500 points, due to the flare-up of the mortgage crisis that hit the United States in general and the entire world in general.
In recent years, the index has made significant gains, due to the boom in the technology sector in the United States.
Who should invest in the Nasdaq index?
Investors who prefer long-term investment with the least amount of risk: By going back to the history of the Nasdaq index and despite the global events that caused the collapse of global markets, the index is making profits over time, it is considered one of the preferred indicators for investors.
Investing on a subject matter in technology: it represents more than 50 percent of the index in technology, it is considered good for investors who want to trade in this sector.
Hedging from the volatility of individual stocks: Investors who trade in individual stocks that are related to the index, can use the Nasdaq 100 as a premium hedging instrument.
People who trust the US economy: The Nasdaq index is often affected by the economic policies of the US government, so people who have a strong belief that the US economy is taking its place in growth must turn to the NASDAQ index.
What you do not know about the NASDAQ
The number of companies that make up the NASDAQ 100 is not 100, but 107.
All Nasdaq 100 shares are issued by financial companies only.
When the Nasdaq index was created, all of the Nasdaq’s shares were technological, but at present the technology field represents only about 50 percent of the Nasdaq shares.
To be listed on the NASDAQ, a company must be listed exclusively on the NASDAQ, and have a daily turnover of 200,000 shares.
The index is reviewed once a year, adjustments are based on stock prices in the previous year, and total shares that are announced on the last trading day, and companies are added or deleted based on their market value.
The trader must be aware that the index is moving quickly due to the fact that the NASDAQ tends a lot towards the technology field and this makes it more volatile.
Those who trade in the NASDAQ 100 index must study in depth the factors that affect the index before conducting the trading process.
How is the price of the Nasdaq index determined?
The relative weight is determined based on the ratio of the share price to the sum of the individual stock prices for the index.
Example: In the event that we assume that Apple includes the bulk of the Nasdaq shares and then comes in second place Google, and if we assume that the stock price for Apple has moved by 1 percent and Google shares also moved by 1 percent down, provided that other shares remain in place , The Nasdaq is moving in the direction of the whole rise, and therefore the value of the index is equal to the sum of the weights of the shares of the index, for each of the securities multiplied by the last sale price, divided by the index divider.
The Nasdaq price is influenced by company earnings reports, and the political and economic conditions that have a direct impact on the price of the index as the determination of the index price is influenced by many factors.
What factors affect the price of the Nasdaq?
There are several financial instruments that influence the high and low price of the index, including:
The index is influenced by events that are related to the US economy, such as changes in laws, interest rates, or policies that could occur for a particular administration.
The index is affected by trends that are related to a specific sector or company, and this affects the price of the index.
The company’s annual earnings reports, which you can obtain even if the index price falls, and the history of the company so that you can get to know the indicator’s direction and direction most of the time.
The demand for the index from investors, or what is known as supply and demand, as the percentage of demand for the index greatly affects the price of the index, up or down.
Financial performance and the sector in which the company operates, where supply and demand and the high price of the index are affected by the financial performance of the main company. In the event that the index acquires a lot of money, it is more valuable to investors.
Global political economic conditions, government policies and relations with other countries affect the index price.
Is trading on the NASDAQ index profitable?
The Nasdaq index has a distinguished position as it is the ideal choice for many investors, to achieve many gains during previous years, making it a good investment for traders.
The Nasdaq 100 index includes a hundred of the most important companies that comply with the standards of the NASDAQ index and these companies are from within the United States of America and from outside it, and therefore the Nasdaq 100 index is not restricted to the United States of America only, and the nature of the index is that it includes the performance of many areas in the result One, it is for huge corporations operating everywhere around the world, all of which has made the index enjoy a place in the stock market.
How do you trade the Nasdaq 100 index?
Through the index you can take advantage of the fluctuations that occur in the overall performance of many large companies in the sectors of technology, social networks, communications, health care and drug production, similar to the companies Apple, Facebook, Google, Amazon, and although you can not trade in the Nasdaq index 100 directly, but there are many financial instruments through which you can trade such as futures and CFDs.
Like many other global indicators, traders can benefit from the movements that occur in the Nasdaq 100 index by trading the index through futures contracts.
There are two main types of Nasdaq 100 futures contracts, namely E-Mini Nasdaq futures and Nasdaq 100 futures, and it is the first of the most popular among traders, due to its low cost and high trading volumes.
E-Mini Nasdaq futures provide high liquidity, which makes them preferred by traders, as between 200,000 and 600,000 futures contracts are traded daily.
Most E-Mini Nasdaq futures traders are speculating by predicting the future movement of the Nasdaq 100 index, and they can enter a long position when they expect the index to rise or a short position when they expect the index to drop.
Trading is on all types of futures contracts for the Nasdaq 100 index on the Chicago Stock Exchange, and trading is throughout the day 24 hours, each contract has an expiration date, and the expiry date is on the third Friday of every month where traders close their deals before the expiration date The contract is re-opened again after this day.
NASDAQ trading via contracts for difference
Trading in contracts for difference is trading in price movements of specific financial instruments, whether it is up or down, as trading in contracts for difference allows you to profit by the movement of the index and financial tools without owning the original.
Contracts for difference are contracts that are negotiable between the person who is trading and the broker, trading is by exchanging the difference in the financial value at the beginning of the contract for the index, and its value at the date of the end of this contract, without buying and actually owning the main financial assets.
When trading contracts for the difference of the Nasdaq, the trader can speculate on the shares of the largest companies in the world, such as Apple, Facebook, Google, Microsoft .. and others, which are characterized by high liquidity.
How contracts for difference work
- A trader chooses an asset from a stock, currency, or index that the broker offers to trade as CFDs.
- The trader opens a deal and specifies the process to be executed, whether buying or selling, the amount he is investing in, leverage..and other criteria that differ according to the broker.
- The trader actually concludes a contract with the broker and approves the opening price of the deal, and the additional fees, if any.
- The deal is opened and is not closed to by the trader himself and a decision to close it, or for the trader to determine the closing of the deal automatically, such as a loss or profit-making order, or if the contract period ends.
- In the case of closing the deal on a profit, the broker pays the trader, but in the event the deal is closed on a loss, the broker charges the trader a fee.
Advantages of trading contracts for difference
Leverage: One of the most important advantages of trading contracts for difference, as it is possible to use a small amount to open deals of a large size compared to owning the asset that is being traded on.
Possibility of profit from decline: In the case of market movements going up or down, you can benefit, there are no restrictions at the beginning of the buying or selling process, in the case if you make the first sale and expect prices to fall, this is called “short selling” and in this case you can buy Then a low price and make gains.
Trading a wide range of markets: Most CFD brokers provide the ability to trade on various assets in a wide range of financial markets worldwide, through trading platforms directly on the Internet, so this diversity in investment tools (stocks, indices, currency, commodities …) provides CFDs are a huge sector for many investment opportunities for all traders.
Lack of government fees: In the case of buying or selling in contracts for difference, this does not require any taxes that are paid such as fees for documentation or stamping, and the reason for this is that the trader does not own the actual assets of what he is trading in, and despite this, the money that It gets from that circulation may be subject to taxes, but this happens on condition that it reaches a minimum that is specified according to what is stipulated in the law of the country of residence.
The possibility of trading throughout the day: CFD trading is available 24 hours, five days a week, starting from Monday to Friday, and this makes the investor free to trade at any time he desires, whether the trader is full-time or a worker, and this is unlike traditional markets, A trader through CFDs can also continue trading even if the main markets are closed.
In the end, the trader must have sufficient knowledge and information about how financial derivatives such as contracts for difference and the size of potential gains and losses from their trading work, so that he can know that this type of investment is appropriate for him or not.
Why should you trade the Nasdaq index with Q8 Trade?
- Q8 Trade provides leverage to increase the value of the capital you are trading with.
- This broker provides you with the opportunity to trade the Nasdaq index through contracts for difference, as this ensures gains, even if there is a decrease in prices.
- You’ll be able to trade the NASDAQ index without any fees or stamps, through contracts for difference, due to the reason that you do not actually own the index.
- Plenty of tools that can assist you in NASDAQ trading such real-time prices, historical charts, important news related to the NASDAQ, live charts, basic/technical analysis and more.